On March 18, the three nationwide consumer reporting agencies — Equifax, Experian, and TransUnion (NCRAs) — announced plans to change how medical debt will be reported on credit reports. The joint measures will result in the removal of nearly 70% of medical collection debt records from credit reports.

The announcement included the following three major changes, with implementation starting on July 1:

  • Any paid medical collection debt will no longer appear on a consumer’s credit report;
  • The NCRAs will extend the period before an unpaid medical debt can be reported from the current period of six months to one year; and
  • In the first half of 2023, the NCRAs will no longer include medical collection debt under $500 on credit reports.

This change follows a 54-page report released by the Consumer Financial Protection Bureau (CFPB) in early March that detailed the effects of medical debt on consumers. The CFPB report focused on issues related to the U.S. health care system and how it is supported by a “billing, payments, collections, and credit reporting infrastructure where mistakes are common, and where patients often have difficulty getting these errors corrected or resolved.”

The CFPB report also highlighted the differences between medical debt compared to other types of consumer debts. These differences include that people rarely plan to incur medical debt and that two-thirds of medical debt are the result “of a one-time or short-term medical expenses arising from an acute medical need.” Unlike other types of consumer debt, consumers also lack the ability to “shop around” for medical services. Choice in medical services is limited by a number of factors, including insurance networks, emergency need, and a lack of transparency in pricing.

The press release accompanying the CFPB’s report added even more pressure on the use of medical debts for credit underwriting, dropping a not-so-subtle hint on the application of the disparate impact theory by stating that the reporting of medical debt causes a disparate impact on Black and Hispanic consumers and that “medical billing data on a credit report is less predictive of future repayment than reporting on traditional credit obligations.”

In a joint statement, the NCRAs recognized that “medical collections debt often arises from unforeseen medical circumstances” and that changes to the way medical debt is reported “are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing.”

Troutman Pepper will continue to monitor any updates released by the NCRAs and the CFPB as it pertains reporting medical debt and changes within the consumer financial services industry generally.

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Photo of David N. Anthony David N. Anthony

David is an experienced trial attorney with a concentration in litigating financial services and business disputes, including class actions related to the FCRA, FDCPA, TCPA and other consumer protection statutes.

Photo of Alan D. Wingfield Alan D. Wingfield

Alan Wingfield is a partner in the firm’s Consumer Financial Services practice, with a focus on Financial Services Litigation and consumer law compliance counseling. Alan has represented businesses in many venues nationally in class action and individual consumer litigation. Alan’s practice includes compliance…

Alan Wingfield is a partner in the firm’s Consumer Financial Services practice, with a focus on Financial Services Litigation and consumer law compliance counseling. Alan has represented businesses in many venues nationally in class action and individual consumer litigation. Alan’s practice includes compliance counseling to help businesses with the myriad federal and state consumer protection laws and laws regulating financial services companies.

Photo of Chris Willis Chris Willis

Chris is the co-leader of the Consumer Financial Services Regulatory practice at the firm. He advises financial services institutions facing state and federal government investigations and examinations, counseling them on compliance issues including UDAP/UDAAP, credit reporting, debt collection, and fair lending, and defending…

Chris is the co-leader of the Consumer Financial Services Regulatory practice at the firm. He advises financial services institutions facing state and federal government investigations and examinations, counseling them on compliance issues including UDAP/UDAAP, credit reporting, debt collection, and fair lending, and defending them in individual and class action lawsuits brought by consumers and enforcement actions brought by government agencies.

Chris also leverages insights from his litigation and enforcement experience to help clients design new products and processes, including machine learning marketing, fraud prevention and underwriting models, product structure, advertising, online application flows, underwriting, and collection and loss mitigation strategies.

Chris brings a highly practical focus to his legal advice, informed by balancing a deep understanding of the business of consumer finance and the practical priorities of federal and state regulatory agencies.

Chris speaks frequently at conferences across the country on consumer financial services law and has been featured in numerous articles in publications such as the Wall Street Journal, the New York Times, the Washington PostAmerican BankerNational Law JournalBNA Bloomberg, and Bank Safety and Soundness Advisor.

Photo of David M. Gettings David M. Gettings

Dave Gettings is a partner who focuses on defending his clients in consumer class actions and complex commercial litigation nationwide.  He specializes in class actions and consumer litigation involving a variety of federal and state laws and regulations, including the Fair Credit Reporting…

Dave Gettings is a partner who focuses on defending his clients in consumer class actions and complex commercial litigation nationwide.  He specializes in class actions and consumer litigation involving a variety of federal and state laws and regulations, including the Fair Credit Reporting Act (FCRA), the Telephone Consumer Protection Act (TCPA) and associated FCC regulations, the Fair Debt Collection Practice Act (FDCPA), the Truth-in-Lending Act (TILA), the Electronic Fund Transfer Act (EFTA), and many similar state consumer protection statutes.

Photo of Stefanie Jackman Stefanie Jackman

Stefanie devotes her practice to assisting financial services institutions facing state and federal government investigations and examinations, counseling them on complex compliance issues, as well as defending them in individual and class action lawsuits. Stefanie represents clients across the financial services industry, including…

Stefanie devotes her practice to assisting financial services institutions facing state and federal government investigations and examinations, counseling them on complex compliance issues, as well as defending them in individual and class action lawsuits. Stefanie represents clients across the financial services industry, including banks and nonbanks, mortgage banking lenders and servicers, debt collectors and buyers, third-party service providers, health care and medical revenue cycle service providers, credit and prepaid card companies, auto lenders, and fintechs. She regularly advises her clients on issues arising under an array of federal and state consumer financial laws, including UDAP/UDAAP statutes, the FDCPA, FCRA, TCPA, EFTA, SCRA, and TILA.

In addition to her litigation and government investigations work, Stefanie focuses a significant portion of her practice on providing compliance-related advice to her clients. She regularly counsels clients on conducting compliance assessments relating to their debt collection, credit reporting and dispute resolution processes, fair lending and underwriting, and vendor oversight, as well as the functionality of their overall compliance management system. Stefanie also brings her litigation and enforcement experience to bear in assisting clients in designing new products and processes, including product structuring, advertising, online application flows, underwriting, and servicing-related strategies.

Photo of Tim J. St. George Tim J. St. George

Tim’s practice includes the representation of clients in federal and state court, both at the trial and appellate level. Tim focuses his practice on the areas of complex litigation and business disputes, financial services litigation, and consumer litigation.

Photo of Cindy D. Hanson Cindy D. Hanson

Cindy Hanson focuses her practice on class action defense. Cindy has handled hundreds of matters under the Fair Credit Reporting Act, including over two dozen class actions.

Photo of Ronald I. Raether, Jr. Ronald I. Raether, Jr.

Ron understands technology and specializes in responding to data integrity events (breach response) and advising companies on maximizing data use through multiple regulatory environments.

Photo of Alexandria Pritchett Alexandria Pritchett

Alexandria is an associate in the firm’s Consumer Financial Services practice. She recently graduated from the University of San Diego School of Law, where she completed her J.D. and served as president of the Black Law Students Association. 

 

While in law school, Alexandria 

Alexandria is an associate in the firm’s Consumer Financial Services practice. She recently graduated from the University of San Diego School of Law, where she completed her J.D. and served as president of the Black Law Students Association. 

 

While in law school, Alexandria served as a certified legal intern for the San Diego Public Defender’s Office. She also served as a corporate counsel intern for AMN Healthcare and judicial extern for the Hon. Cynthia Bashant of the U.S. District Court of the Southern District of California. Alexandria earned her B.A., cum laude, from Syracuse University. 

 

At USD Law, Alexandria was admitted into the Order of Barristers and received CALI Excellence Awards in the following courses: Legal writing and research, Jurisprudence, and Civil Rights Theories.

**Licensed to practice in California.

Photo of Meagan Mihalko Meagan Mihalko

Meagan specializes in consumer financial services litigation with a focus on debt buyers and collectors.